The ever-growing tourism market in and around Orlando shows no signs of slowing down in 2019, and area hotels need to grow right along with it.

Orlando welcomed a record 72 million visitors in 2017, according to Visit Orlando, and it’s expected to break that record once the 2018 figures are released later this year. This kind of growth comes with challenges for hotels, as tourism growth has long outpaced the number of new hotel rooms being built in the region. Between 2010 and 2017, the number of rooms in Orlando increased by an average of less than 1 percent per year, while the number of visitors jumped by 6.3 percent annually.

But Paul Sexton, vice president of Orlando hotel services firm HREC Investment Advisors, tells Orlando Rising the market seems to be in a much better place heading into 2019. Low-end, motel-style properties built in the 1970s and 80s are rapidly being replaced, the supply of rooms is growing more quickly, and a strong economy means the boom is likely to continue.

“In 2019, I think we’re going to be hitting on all cylinders,” Sexton said.

New theme park developments will only help that growth across the region. With the highly anticipated Star Wars: Galaxy’s Edge opening at Disney’s Hollywood Studios in the late fall, both Disney hotels and properties in the Lake Buena Visita submarket east of Disney World should see strong demand and projects to expand capacity.

Disney already has multiple hotel projects in the works, such as a new 545-room tower at Coronado Springs and a new hotel being built next to the Swan and Dolphin called The Cove.

When asked what hotel projects are attracting the most attention from other operators, Sexton mentioned two. One is the first phase of Universal’s Endless Summer Resort opening this summer at the corner of International Drive and Universal Boulevard.

Rendering of Universal’s Endless Summer Resort (Universal Orlando)

“That’s going to be another 2,000 people per day that’s in the I-Drive submarket,” Sexton said.

The other is the Margaritaville Resort Orlando opening later this month in Kissimmee.

The 300-acre, Jimmy Buffett-themed destination will help boost the submarket around U.S. 192, once the go-to area for budget-minded Disney guests that suffered as other hotels offered newer, higher quality lodging than its older, motel-style buildings.

“Kissimmee is surprisingly strong, Sexton said. “It’s coming out of its deep recession that’s been going on for about 20 years. A lot of the older hotels have either found alternate uses, been demolished, or have been significantly upgraded. People are starting to come back to Kissimmee.”

One potential threat to the booming hotel market in Orlando may come from vacation rentals. Sexton noted there was a slight drop in occupancy rates towards the end of 2018, despite the increased number of visitors to the region. One possible explanation is the increased availability of vacation homes and short-term rentals, especially in Kissimmee.

“That shadow supply is probably a little bit stronger than maybe some people anticipated and it is robbing hotels of occupancy,” Sexton said.

About The Author

John has covered sports, politics, government and health care for a variety of news outlets, including the Illinois Radio Network and Rivet News Radio, as well as freelance work for the Florida Radio Network and contributing to the Unofficial Universal Orlando Podcast. He is a graduate of Columbia College Chicago. You can find him in the theme parks every chance he gets.

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